Insurance Company Liable To Pay Compensation Even When Driver Does Not Have Valid License, May Recover From Owner Later: Madras High Court

The Madurai bench of Justice Teeka Raman made the above observations on an application filed by the owner of the offending vehicle, Thanikodi against the order passed by the Motor Accidents Claims Tribunal, Peiyakulam. The Tribunal had held that the owner of the vehicle was liable to pay compensation and exonerated the insurance company and had awarded compensation.

The original claimants are the legal heirs of the deceased. They had filed a claim petition before the Motor Accidents Claims Tribunal, Periyakulam. They claimed that the driver had driven the tractor in a rash and negligent manner and without any signal, suddenly turned his vehicle thus hitting the deceased who was riding a two-wheeler just behind the tractor.

The insurance company, on their counter, stated that on the date of the accident, the driver of the accident did not own any driving license to drive the vehicle.

On appeal against the exoneration, the appellant contended that though the driver of the offending vehicle does not possess a driving license, the insurance company cannot be exonerated from the liability and they have to pay and recover and relied upon the National Insurance Company Limited vs. Swaran Singh & others (2004).

The insurance company, on the other hand, relied on the decision of the Apex Court in Beli Ram Vs Rajinder Kumar and another (2020) where the court observed as below –

"When a tort-feasor failed to renew the driving license within 30 days of expiry of driving license, as per the provision of the Motor Vehicle Act, the Insurance Company is not liable to pay compensation", as owner of the vehicle has committed breach of terms of policy by entrusting the vehicle to a person not possessing a valid driving license"

The court discussed the law laid down in United India Insurance Company Ltd v. Krishnaveni and Others (2020) where the court had clearly stated that when the claim is made under the Workmen's Compensation Act, the insurance company can be exonerated. Here, the employer-employee relationship is a vital part and precondition for maintaining a claim petition under the Act, and for non-possession of the driving license, the insurance company can be exonerated. However, when the claim petition is filed under the Motor vehicles Act, the Insurance Company may be directed to pay the compensation and recover the amount from the owner of the vehicle.

The court thus applied the principle of pay and recovery and directed the insurance company to compensate the family of the deceased and later recover this amount from the owner of the vehicle in the manner known to law.

Case Title: Thanikodi v. Parameswari and Others

Case No: CMA (MD) No. 211 of 2018

Counsel for Petitioner: Mr. R. Suriyanarayanan

Counsel for Respondent: Mr S. Anand Chandra Sekar (R1) and Mr C. Karthik (R5)

Citation: 2022 LiveLaw (Mad) 173

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